2024H1 performance is expected to increase year-on-year, with AIoT penetration helping performance growth, maintaining the 2024 semi-annual performance forecast issued by “buy” rating companies. 2024H1 is expected to achieve net profit of 1.60 to 0.195 billion yuan, +543.15% to +686.29% year over year; it is expected to deduct non-net profit of 1.54 to 0.189 billion yuan, +924.00% to +1160.00% year over year. According to our calculations, 2024Q2 is expected to achieve net profit of 0.92 to 0.127 billion yuan, +112.72% to +194.94%, +35.77% to +88.25% month-on-month, and 0.88% to 0.123 billion yuan in non-net profit, +122.88% to +212.96% year-on-year, and +32.68% to +86.30% month-on-month. Benefiting from the continued penetration of AIoT, we raised our 2024/2025/2026 profit forecast. The net profit for 2024/2025/2026 is estimated to be 0.426/0.619/1.066 billion yuan (previous value was 0.38/0.563/0.859 billion yuan), and the 2024/2025/2026 EPS is expected to be 1.02/1.48/2.55 yuan (previous value was 0.91/1.35/2.05 yuan). The PE corresponding to the current stock price is 66.4/45.7/26.5 times, we are optimistic about the growth brought about by end-side AI penetration and maintain a “buy” rating.

The recovery in downstream demand combined with AIoT penetration has brought about performance growth. The AIoT product matrix continues to improve 2024H1, benefiting from the gradual recovery of market demand, the gradual recovery of enterprise sentiment, the return of terminal customer inventory to normal, and the restoration of company performance. At the same time, it also benefited from a clearer trend of localization and miniaturization of AI models at the edge and terminals, continued penetration of end-side AI, continued growth in the AIoT market, and further growth in company performance. At the same time, the company's AIoT product line has covered many application fields and has formed a product layout advantage. 2024H1. The company continues to break through in the fields of automotive electronics, machine vision, industrial applications, education and consumer electronics, etc., and the AIoT product line continues to penetrate. Among them, mass production customers and projects of the flagship RK3588 chip continue to grow, and sub-new products represented by RK356X and RV1106/1103 are also accelerated. The company released a new generation of mid-range and high-end AIoT processors RK3576 and AI New products such as the audio processor RK2118 have further improved the company's AIoT chip matrix.

The company's AIoT product matrix continues to expand, and the continuous penetration of end-side AI is sufficient. As downstream demand continues to recover and end-side AI continues to penetrate, the company's revenue is expected to continue to grow. At the same time, as a leading AIoT SoC chip manufacturer, the AIoT product matrix has formed a layout advantage. We believe that with the further improvement of the company's AIoT chip matrix, the company has sufficient growth potential.

Risk warning: downstream demand falls short of expectations; promotion of new products falls short of expectations; industry competition intensifies.